Key Government Provider Carillon collapses under billion-pound debt

Carillon, one of the UK’s largest construction and management companies, has been forced into liquidation.

On Monday, after failing to negotiate a deal with the government and investors, the company responsible for huge public-sector redevelopment projects such as HS2 and Liverpool’s new Royal hospital filed for liquidation at the high court.

20,000 workers are set to be made redundant with the company’s pension fund £580m in the red, and debts rising to £1.5bn. Documents show Carillion had only £28m at the point of collapse. Alan, a construction worker from Uxbridge, said: “I never heard of any problems with Carillion, a company that big, awarded all those jobs.”

Over the last 30 years Carillion has been involved in virtually every major UK construction and redevelopment project: the redevelopment of Battersea power station, the Government’s communications hub, GCHQ, London 2012 Olympics, and the library of Birmingham. Carillion also run prisons, barracks and are responsible for delivering meals at several UK schools. Continuing, Alan said: Carillon only have themselves to blame, they used to under-bid to win jobs from competitors and then wouldn’t have enough money to finish the jobs.”

Carillon were awarded most of these jobs by various governments, both Labour and Tory. The outsourcing of public-sector work, to private contractors, policy favoured by Tony Blair has been a popular way of building new schools and hospitals ever since.

Jeremy Corbyn, who has remained vehemently opposed to private finance initiative’s (PFI’s) or so-called public-private partnerships today at PMQs said: “Carillion is not an isolated case and the system is broken.”

Corbyn asked why the warning signs were ignored, adding: “Over the last 6 months, the Government have awarded over £2bn worth of contracts to Carillion, it did so even after the share price was in free fall and when the company issued profit warnings.” Transport Secretary, Chris Grayling, insisted Carillion’s financial problems “were not an issue” after the company successfully acquired HS2 contracts last July.

Phillip Green, Carillion CEO, a Conservative party donor, and business adviser to David Cameron, is set to still receive a huge £700k salary, just like former boss Richard Howson, who left the company more than a year ago. It raises huge questions on the competency and transparency of this government, who has issued 3 profit warnings to Carillion yet kept giving them huge government contracts. Corruption in this administration clearly played a role in crisis the company and it’s workers now face.

Thousands of young student apprentices are among the many workers currently in limbo waiting for a decision on their future. Last night the BBC reported the story of a young apprentice, Kyle, who was sent home from college without any explanation.
Alan said: “I’ve been made redundant before and its never the big guys who feel the brunt. It’s the small guys out here working, the grafters.”

Several warning signs were ignored, and questions regarding the competency of this government must be tabled. Critics have increasingly argued huge government contracts, instead of being awarded to huge companies like Carillion, should be spilt between smaller providers. Though, the collapse of Carillion forces one to think whether private companies should be entrusted with our vital public services at all. Writing for The Independent earlier this year, Shadow Chancellor, John McDonnell, explained: “The privatisation of our public services has been national failure – it’s time to take back control.

“Labour will turn off the tap siphoning billions of pounds into shareholders’ pockets and ensure these vital services are run in the interests of the many, not the few.”

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